Larry Gagosian Buys and Sells Buildings the Same Way He Does Art—Behind Closed Doors; If he wasn't dealing art, "I’d probably be in real estate."

For five years, the Harkness Mansion lay vacant, a shell of its former record-setting self. Built in 1896 by shipping magnate Nathaniel McCready, it would change hands over the years among the city’s industrial elite. IBM president Thomas Watson bought the home in 1939 and sold it years later to the Harknesses, Standard Oil investors who also owned a mansion across the street. It was turned into a studio and school for the Harkness ballet company in the 1960s. In 1987, Jacqui Safra, the Swiss banking heir and Woody Allen investor, bought the rare, 50-foot-wide limestone mansion for $6.9 million. Two decades later, just as the real estate bubble was on the verge of bursting, private equity impresario J. Christopher Flowers dropped a staggering $53 million on the 20,000-square-foot home, the highest price ever for a residential property in the city.

Shortly after taking over the home, he began demolishing the interiors, preparing for a top-to-bottom gut renovation that would cost millions of dollars more. Instead, it was Mr. Flowers who got hit in the gut, when his wife asked for a divorce. For two years, the manse went wanting because buyers tend to prefer a move-in-ready home. “It was a black hole,” Mr. Flower’s broker, Brown Harris Stevens’s Sami Hassoumi, told The Observer last Thursday. “What I was showing wasn’t a house, it was a construction site. I had a temporary construction staircase that was scary. We had to wear hard hats.”

For most buyers, this would have been a nightmare. Not for Larry Gagosian, proprietor of the eponymous gallery empire, which is headquartered two short blocks away at 980 Madison. Not only does he pick up one of the most coveted properties in the city, but like the art he swaps on a regular basis, it was achieved through a deal that almost no one else could have expected or achieved. “They said they weren’t taking a penny less than $40 million,” broker A. Laurence Kaiser said. “And look what he got it for.” He got it for $36.5 million.

Mr. Gagosian’s purchase of the home is in some ways no different from his approach at auction. He knows how to spot value, an opportunity. Witness his purchase, last November, of a 1980 painting by Roy Lichtenstein for $2 million at Christie’s. Mr. Gagosian stayed until the bitter end of the auction to pick up the picture—it did not have many other bidders. In his booth at the Art Basel fair in June, the painting was on offer for $5 million.

It would not be surprising for Mr. Gagosian to fix up the Harkness, give it his signature shine, and sell it for well more than Mr. Flowers paid in a decade or two. For that matter, consider Mr. Gagosian’s savvy purchase, in 1999, of the West 24th Street building that now houses his gallery there. He bought it from the Gambino family for $5.75 million. In 2007, it was estimated to be valued at around $40 million, with air rights.

In the meantime, the Harkness is so much more and so much less than a home to Mr. Gagosian. It is a would-be gallery, a statement of intentions, a way of life, just another deal on the way to countless more. A showcase, a showpiece, a show stopper. “He thinks of himself as a billionaire and wants the lifestyle of a billionaire,” said one collector who does business with Mr. Gagosian. He shuttles between his 11 worldwide galleries on his private jet; two years ago he had Christian Liaigre design a home for him in the ultimate billionaire vacation spot: Flamand’s Beach, on St. Barth’s. Now he has the Fifth Avenue mansion to go with all that.

For someone who grew up in a modest home in Los Angeles, Mr. Gagosian’s art has always been entwined with the buildings in which he shows it, perhaps more so than any other gallerist to come before him. Fifteen years ago, Mark Stevens, then the art critic for New York magazine, wrote an article describing the look of what he called “power galleries.” Mr. Gagosian told him, “I’m out there, I don’t hide. People say ‘high profile.’ I’m not doing it because I want to be high profile. That’s the tail wagging the dog. Somebody said, ‘Why don’t you live in a little house with an old car? Nobody will write about you.’ But I grew up in a little house with an old car.”

From Venice, Calif., to the Upper East Side, Soho to Chelsea, and around the globe, the lengths to which Larry Gagosian goes to present his art are unparalleled, and now he owns the ultimate stage. In buying the Harkness Mansion, Mr. Gagosian not only purchased a century-old limestone shell, he also purchased a regal facade, into which he can pour his architectural and artistic dreams.